SAVERS looking to make the most of their hard-earned cash can now earn 2 per cent interest as Metro Bank has upped the rate on its one-year fixed savings account.
The rate jump from 1.7 per cent to 2 per cent – for new savers only – makes the account the joint top-paying one-year fix alongside Kent Reliance.
Alamy Metro Bank has upped the rate on its one-year fixed savings account making it a best buy
But what might edge the account for savers it that Metro Bank’s account has a lower £500 minimum deposit compared to Kent Reliance’s £1,000.
You can open the account both online at Metro Bank or in branch and up to £85,000 saved with the bank is protected by the Financial Services Compensation Scheme.
But you can only make one deposit when you first open the account and after than you can’t withdraw the cash for a year.
So you should only open this account if you can live without the money for 12 months.
How do you switch Isa provider?IF you’re in the market for a new, better paying Isa, there’s one thing you shouldn’t do.Never withdraw money from your Isa account to put it into your new one – if you do it’ll lose its tax free benefits.
Instead you need to follow the simple transfer process.
Make sure that the new account you want to use accepts transfers (not all do) and then fill in the Isa transfer form with the new provider.
It will arrange for your savings to be transferred over, with the process taking no more than 15 working days.
And remember, you can only have one “active” Cash Isa per tax year.
Once the 12 months is up the cash is automatically moved to Metro Bank’s Instant Access Savings Account if you opened the account online.
If you open the account in branch you can choose which Metro Bank account you’d like the cash to be transferred to.
Metro Bank’s Instant Access Savings Account only pays 0.55 per cent interest so make a note in your diary to check rates and move your cash elsewhere.
Currently, the best buy easy-access savings account pays 1.5 per cent at both Kent Reliance and Marcus, according to MoneySavingExpert.com.
You can earn more than 2 per cent in a savings account but you have to be willing to lock your cash away for even longer.
Check out our round-up of the best savings accounts.
Another option is to go for an interest-paying current account but these will have limits on how much you can save and will make you jump through hoops to get the rate.
We’ve rounded-up the top interest paying current accounts.
Savers can also consider Cash Isas – the top rates on these are also 1.5 per cent for easy access accounts but they’re less on one-year fixes at 1.8 per cent.
But the pros of using an Isa is that any interest you earn is tax-free.
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With a savings account, you can earn £1,000 tax-free a year if you’re a basic rate taxpayer and £500 a year tax-free if you’re a higher rate tax payer (additional rate taxpayers don’t get an allowance).
See our Best Cash Isas guide for a round-up.
Metro Bank has also upped the rates on its 18-month fixed saver from 1.95 per cent to 2.1 per cent and on its three-year fix from 2.05 per cent to 2.25 per cent – but these aren’t best buys.
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